Transcription of The Stock Network Interview with Chariot Resources (ASX:CC9), Executive Chair and Managing Director Shanthar Pathmanathan
Lel Smits: Chariot Resources has commenced a 15-day geological mapping program at Egana in Nigeria, funded and operated by ZhongNuo. The results will help determine which of Egana, Fonlo or Saki is selected for the proposed minimum 1,500-metre diamond drilling program. I’m joined today by Chariot Executive Chair and Managing Director Shanthar Pathmanathan to discuss the mapping program, selecting the drilling targets and key milestones ahead.
Shanthar, welcome back to the Stock Network.
Shanthar Pathmanathan: Hi Lel, how are you? Very good and pleased to have you on. Also keen to understand more about the Egana mapping program in Nigeria.
What are you hoping that the mapping and sampling program will reveal about Egana’s lithium potential?
Shanthar Pathmanathan: Sure, so Egana for everyone’s benefit has produced a significant amount of lithium. If you look at our presentation, you’ll see an image of the current pit at Egana. And that shows that the local artisanal miners, albeit funded by some smaller Chinese businessmen, have gone down about 10 metres.
So what ZhongNuo is hoping to do, ZhongNuo is obviously in partnership here with C&D, a state-owned company, one of the largest companies on the planet. They want to do something larger scale. So they’re looking to find the ability to expand the current pit.
That should do it. Expanding the current pit should provide them the 240,000 tonnes. They’re also mapping the rest of the properties.
So they’re looking for other showings of spodumene. This will not be for phase one. Phase one will be catered for by expansion of the current pit.
And they’re basically just mapping. By mapping, what I mean is taking samples at specific locations, and then that’ll feed into electronic maps, the data from the sampling process.
Lel Smits: Excellent. And with mapping also planned at Fonlo and priority targets at Egana, what will determine which project is selected for the drilling?
Shanthar Pathmanathan: Yeah, sure. I think it’s going to come down to that they have a very specific purpose, this group. They’re not looking to drill and find a Pilbara-style resource, right? So they’re looking for something in between.
And so I think it’s going to come down to what the mapping shows about drill prospectivity, and also what the mapping tells us at this point about the potential mining costs. So how much waste rock is there versus the ore body, et cetera. So they’re essentially surveying the current pits to understand before drilling.
Drilling is obviously going to be more definitive, because the drilling will feed into what’s called a block model that will tell a bit more definitively mining costs, grades, et cetera.
Lel Smits: Yes. And finally, Shanthar, really in terms of milestones, what do you think investors should be looking as Chariot moves towards that proposed 1,500-metre drilling program?
Shanthar Pathmanathan: Yeah. So firstly, the contract with CND and ZhongNuo spells out a framework for how to execute this deal. So firstly, what’s going to come is them selecting a project. In the background, we’re negotiating a mining contract and an off-date contract.
The off-date contract is an off-the-shelf document that CND uses with its other clients. And so CND is the largest buyer of lithium on the planet, the largest off-taker of lithium. So they’ve got a standard off-date contract.
The mining contract needs a bit of work. So the first thing is project selection. Second is mining contract, off-date contract.
And then from there, we will wrap it. Also, we will be announcing the mining leases at these projects, because to start mining, you need a mining lease. I can just say that good progress has been made and announcements will come.
So that’ll then set us up for closing the deal with ZhongNuo and CND, definitive agreements, at which point they have to pay us US$500,000 in cash as a prepayment on the off-take. Over time, we will reduce what we owe them by giving them product. And then from there on, they just pay us in cash for the product.
So I think it’s going to be two months of getting this deal closed, project selection, contracts, and then drilling after that. So the drilling, followed by a mine plan that they’ll put together based on the drill data. And then going into the Nigerian dry season, as they call it, we will look to see commencement of production from there.
So I think the way it’s setting up is, it’s better to be on the ground in the dry season, and that’s what they’ll be doing.
Lel Smits: Shanthar, thank you for the update from Chariot Resources.
Shanthar Pathmanathan: Thanks a lot.
Ends